What Does Poor Quality Data Cost Your Organization?
by James Rouse
Most organizations today do not realize the impact and cost of poor data quality on the bottom line. Poor quality data impacts an organization’s ability to operate effectively and efficiently. The inability to get timely data or correct data impacts the decisions being made and negatively impacts business opportunities.
How do you know if you have a problem with data and information quality? There are a number of simple indicators to look for:
- First, how much time does the organization spend correcting inaccurate data, scrambling to compile information across multiple databases? Are you struggling to integrate disparate data or looking for missing data?
- Second, count how many different versions of the same information reside in multiple databases or locations. These can be in corporate databases, individual PC databases or MS documents like Excel and Word.
- Third, how often do you fail to find a given piece of information or find multiple versions of the same piece of data?
If your organization has experienced any of these conditions, you certainly have data quality problems.
Why do senior executives not know about the high cost of poor quality information within their organization? They are generally isolated from the business processes that utilize the poor data. When they ask someone to get information for them, senior executives do not personally see how much effort goes into acquiring and verifying the information before it winds up on their desk.
One major pharmaceutical organization did not realize how poor their customer database was until after several warning signs were ignored. A senior marketing leader commented about the difficulty they were having in making an impact on targeted prescribers. He reported that 25% of all their expensive, glossy marketing brochures were being returned by the postal service due to incorrect mailing addresses. Unfortunately, the 25% represents only what was being returned back to the company. There was an estimated 5% to 10% more that were simply being thrown away and not being given back to the postal service for return to sender. They had no idea how many were reaching their intended target. There was also a direct impact on the sales force following territory realignments. Frequently sales reps in new territories would take up to six months to identify and locate all of their new prescribers. Inaccurate customer data had a major impact on this organization and its bottom line.
There are well documented cases of companies with multiple customer data files. One national bank had over 250 different customer databases. A telecommunications company had over 800 customer databases. How much time and effort would it take to analyze a simple question like who is our best customer?
Most organizations today don’t monitor or analyze the quality of their data and information. Most do not have any formal processes to address quality issues with their data and information. In fact, most organizations cannot even identify who is responsible or accountable for the accuracy of the information utilized by their given business units.
Experts estimate that poor quality information cost organization’s between 20% to 35% of their operating revenue due to process failures and information scrape and rework. This number could increase up to 40% for organizations which are information intensive, such as banks, insurance and pharmaceutical companies.
Poor quality data has a significant impact on business processes, productivity and ultimately the bottom line. It is a threat to the enterprise. However, by creating a process to continuously improve data and ensure its accuracy the business will have established a competitive advantage.
